Barry Ritholtz: Trump is endangering his own economic agenda

Let’s begin by stating the obvious: My priorities are different than yours or Paul Ryan’s or the president’s. We all have a different agenda, motivated by different issues. Sometimes finance dominates our wish list; other times it’s family. We are motivated by self-interest, by philosophical or ideological goals, and a wealth of other factors.

Readers of this column are a self-selected group. If you are reading this, you very likely have capital at risk in a variety of investments. You are more likely to have higher-than-average levels of education, income and professional standing. Which leads me to this claim: President Donald Trump is on the verge of endangering what for readers is the most significant aspect of his entire agenda – a once-in-a-generation opportunity to accomplish tax reform. It is an issue of great significance with lasting repercussions.

Full disclosure: I did not support candidate Trump, either during the Republican nomination process or the general election, due to his positions on social issues.. I find myself in agreement, however, on a significant portion of Trump’s economic, tax and infrastructure positions. I suspect that many readers of these pages find themselves supporting those positions as well.

As we discussed last month, the Trump administration’s combination “of a corporate tax overhaul, repatriation of overseas profits and individual tax reform” is an economically powerful set of policy tools. Include a $1 trillion-plus infrastructure plan, and you have a path for future growth better than the 1 percent to 2 percent post-financial-crisis recovery period.

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The White House has been bumbling and unfocused, filled with infighting and leaks, unable to manage even the most basic functions of governing. Perhaps the bigger concern is that its priorities are inverted. Getting tax reform done should have been job No. 1, and the failure to do that first could be problematic for Trump’s entire agenda.

Slipping odds

Had you asked me Nov. 9 what the odds were of his economic agenda being accomplished, given the single-party control of the federal government, I would have laid odds at 96 percent. The ham-handed, poorly planned rollout of the travel ban lowered that to 88 percent. The latest incompetent action has been an attempt to replace the Affordable Care Act with something hated by both conservatives and liberals, sending that down to 75 percent. Perhaps the biggest self-inflicted wound has been the foolish tweet claiming former President Barack Obama “ had my ‘wires tapped’ in Trump Tower.” It called into question the president’s seriousness about governing.

Or are the allegations of the Trump campaign’s ties to Russia bigger? No doubt it was a colossal miscalculation that FBI Director James Comey’s congressional testimony would back up Trump’s claims that his campaign had no such ties and that no investigations were under way. Comey didn’t, and the list of the campaign’s alleged ties to Vladimir Putin’s Russia is growing longer. The appearance of this much smoke is leading many to accept there must be a fire. This – plus Comey’s damning testimony – has caused me to lower my odds of Trump’s full economic agenda being realized to barely over 50 percent. Effectively, it’s a coin toss.

It is a rare day indeed when both the Wall Street Journal and New York Times make an issue of the president’s credibility, and how his near-pathological lying is imperiling his agenda – indeed, his entire presidency.

Thus, as we approach the 100-day mark, the promised pivot toward becoming “presidential” is nowhere to be found. Instead, we see the entire economic agenda – much of which was supported by those on both sides of the aisle – now in danger. The 2017 tax cuts are now being pushed out to 2018. Assume the same for corporate tax reform. What that means for overseas profits repatriation and an infrastructure buildout is similarly up in the air.

This no longer looks like a stumble out of the gate, but rather something more significant. The window for comprehensive tax reform is still open – but it is slowly beginning to close.

Without a major win, the White House should go back to the drawing board and introduce legislation it can actually pass. The policy prescription of tax reform, overseas profit repatriation and infrastructure is what this president badly needs. Let’s hope he figures it out in time.

Barry Ritholtz, a Bloomberg View columnist, is the founder of Ritholtz Wealth Management. He is a consultant at and former chief executive officer for FusionIQ, a quantitative research firm. britholtz3@bloomberg.net, www.ritholtz.com/blog.